Google, Facebook and other digital platforms will be put under the microscope as the competition watchdog dives into whether technology giants are exercising market power in commercial dealings to the detriment of consumers, media and advertisers.

"They are essentially advertising companies. People think of them differently, but there's no question they're advertising companies, they're trying to tailor their product to advertisers," ACCC chairman Rod Sims told The Australian Financial Review.

Silicon Valley technology giants, such as Facebook, Google and Twitter, are under increasing scrutiny from governments around the world. In the US, executives were hauled in front of the US Congress to testify in hearings into Russian interference in the 2016 American election.

In the EU, they, among other technology companies, are facing tighter privacy laws amid concerns about the personal information they are collecting on individuals and consumer rights to limit access to that data.

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Countries across the world are also pressuring tech giants to act on the spread of fake news and hate speech on their platforms.

Mr Sims said the watchdog goes into the inquiry with an open mind to see how digital platforms, such as Google and Facebook, operate.

"In terms of the framework, it's very much two-fold. One is looking at the market power of Google, Facebook and others may have and how that effects what goes on in the advertising market and how that effects the media market," Mr Sims said.

"The second lens is the extent to which people are misled. By that I mean, if you're an advertiser, how much do you know about whether your advertising is getting to consumers, if you're a content provider, how much is getting through and if you're a consumer how does your news get to you."

The ACCC will also look at longer-term trends of the impact of technology changes on competition in advertising and media.

"How much of that is the natural evolution of technology and how much of that is due to market power or misleading conduct issues is what we need to get to the bottom of," Mr Sims said.

'There are growing concerns'

The terms of reference include: the extent to which platforms are exercising market power in commercial deals with content creators and advertisers; the impact of platforms on the amount of choice and quality of news for consumers; the impact on media and advertising markets; and the impact of longer term trends on media and advertising.

A Facebook spokeswoman said: "People come to Facebook primarily to connect with friends and family, share around communities of interest through Facebook Groups, and connect with the organisations and public figures that matter to them," she said.

"Whilst the sharing of news and entertainment content is only a small part of the content shared on our services, we take our role in the media ecosystem very seriously and invest significantly in products that support publishers. We look forward to a thorough inquiry into the Australian media market."

Foxtel group director of corporate affairs Bruce Meagher welcomed the inquiry into the impact of digital platforms on Australian media and the economy more broadly.

"It is undoubtedly the case that massive global players are having a huge effect on the local market and also that, in many cases, they operate without the regulatory constraints that apply to local media companies and without the same commitment to supporting local content," he said.

"We need to ensure that local media remains strong so that we can continue to hear Australian stories and voices."

A Ten spokesman said the broadcaster welcomed the inquiry because it was time to have a look at the growing competitive dominance of Google and Facebook and particularly the impact on quality local news and content production.

"There is no doubt that the huge shift in local advertising dollars to the digital duopoly of Facebook and Google is making it much harder for media companies in Australia to fund journalism and quality local news and current affairs," he said.

"Despite taking a rapidly growing share of advertising revenue out of the market, Facebook and Google do not employ local journalists or fund the creation of real news."